Trading Thalesians [electronic resource] : What the Ancient World Can Teach Us About Trading Today /
Amen, S.author.
This book mixes history on the ancient world with investment ideas for traders involved in financial markets today. It goes through ideas such as measuring risk, whether investors should try to outperform the market, Black Swans and ways of creating appropriate investment targets. It will appeal to professional traders and retail investors.
Description based upon print version of record.
Cover; Contents; List of Figures; Foreword; Prologue; 1 Introduction; 2 The Basis of Everything Is Water: Understanding Risk in Markets; Water as risk; The motivation to measure risk; Understanding risk in games; Oracles rather than probabilities; Quantifying financial risk through volatility; Structural breaks in volatility regimes; Risk sentiment and the impact on market volatility; Can we predict shifts in market risk sentiment? We can try . . .; RORO your investment boat; Understanding implied versus realized volatility; Trading risk directly through options
Classifying groups of investors by their attitude to riskDoes the time horizon of a trading strategy correlate with how risky it might be?; Understanding risk through the use of scenarios; How can we estimate our maximum possible loss? Using stop losses and take profits is one way; Should we even bother to quantify risk if it's difficult? Yes!; 3 Harvesting Olives: Alpha and Beta Strategies; Olives, presses and Ancient Greece; The ancient Olympic Games, the unusual olive trade of Thales, and following your strengths; An example of differences between supposedly simple cash markets
The ideas of alpha and beta in the present dayWhat if there's no obvious market beta?; Allocating between different market betas; Ancient Greek maritime traders, grain, timber, olives, and alternative beta; A practitioner's thoughts on alternative beta, alpha, and beta; Alpha is not always better than beta; Do retail investors beat the market beta? Not in our examples; Should investors trade alpha or beta?; 4 The Code of Hammurabi: Reducing Risk; The origins of insurance and Hammurabi; The concept of diversification when investing
The mathematical way to diversify: The good, the bad and the super-leveraged portfolioAlliances amongst Ancient Greek poleis: Hedging specific risks; Hedging specific risks in a portfolio: A financial viewpoint; Illustrating hedging with an example; For times illiquid: A proxy hedge; Is diversification always a good thing? Is concentration always a bad thing?; Diversification in a hedged world; 5 Not What They Care About: Having Targets Other than Returns; How did Thales' motivation to trade differ from the investors of today?; The problem with only targeting returns
What about purely targeting risk within a limit?A tale of two traders; Ancient incentives to change trader behavior; Using the Sharpe ratio as a target; What does the Sharpe ratio fail to capture?; Understanding drawdowns in investments; Is all volatility bad? Enter the Sortino ratio for targeting investment performance; Why should portfolio targets differ between investors?; Is reaching an investment target fate?; Deviating from our investment mandate can impact our targets; A view on targets and risk from an investor; Summarizing our journey through investment targets
6 Predicting the Eclipse: Searching for a Black Swan and Windows of Doom
Includes bibliographical references and index.
This book mixes history on the ancient world with investment ideas for traders involved in financial markets today. It goes through ideas such as measuring risk, whether investors should try to outperform the market, Black Swans and ways of creating appropriate investment targets. It will appeal to professional traders and retail investors.
Capital market.
Investment banking.
Securities.
Finance—History.
Corporations—Finance.
Business enterprises—Finance.
Capital Markets.
Investments and Securities.
Financial History.
Corporate Finance.
Business Finance.